Federal Judge Blocks New FLSA Overtime Rules

Federal Judge Blocks New…

On November 22, 2016, a U.S. District Court Judge in the Eastern District of Texas issued an order granting a preliminary injunction in a case brought by twenty-one (21) states against the Department of Labor (“DOL”) seeking to stop the new Fair Labor Standards Act (“FLSA”) overtime regulations from going into effect. The new regulations were set to go into effect on December 1, 2016, and raised the minimum salary level for the executive, administrative, and professional exemptions from $455 per week to $913 per week, meaning that previously-exempt employees would need to be paid overtime if their salaries were less than $913 per week. The new regulations also established an automatic updating mechanism adjusting the minimum salary level every three (3) years. In granting the injunction, the court found that the DOL placed too much emphasis on the salary level of the employees under these exemptions instead of the duties of the employees. The significant increase in the salary requirement created a “de facto salary-only test,” which was inconsistent with the intent of Congress with respect to these exemptions. The court additionally found that the DOL lacked authority to implement an automatic updating mechanism.

Importantly, the injunction issued in the case applies nationwide. As a result, employers in Oklahoma and elsewhere will not be required to comply with the rule on the December 1st effective date. Employers may continue to follow the existing overtime rules until a further decision is reached. However, the injunction is only preliminary in nature, and further developments in the case may cause the new regulations to go into effect at a later date.

We are aware that employers have been taking steps to address the new regulations, including raising salaries for certain employees to meet the new salary-test levels. If you have questions on implementing changes or reversing any actions previously taken, please contact us.

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